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Trustees and proxy voting

IN A NUTSHELL: One of the key responsibilities of the trustees of a retirement fund is to establish the investment mandate of a retirement fund and to ensure the fund’s investment manager complies with it. One way to fulfil this role is by being involved in the proxy voting process.

Central to your function as a trustee is ensuring the fund’s investment manager invests in accordance with the fund’s investment policy. This policy includes the investment outcomes as well as the methods by which a fund’s investment strategy will achieve them.

These words refer to the same thing: Investment mandate = investment policy

By being a shareholder in a company, retirement funds have voting rights to participate in the annual general meetings (AGMs) and enable proposal submissions. Trustees extend these voting rights to investment managers by granting them proxy voting rights. However, trustees have a responsibility to monitor how these intermediaries are voting on their behalf.

This stewardship model requires that trustees pay attention to detail and require reporting from their investment managers to ensure they measure returns effectively against the retirement fund’s mandate.


Trustees of a retirement fund have been presented with the AGM agenda for a company in which they are invested. Upon a thorough investigation of the topics, it comes to light that the newly appointed CEO of the company is interested in pursuing the acquisition of a smaller company with questionable governance and financial reporting concerns. The purchase of this smaller company is not in alignment with the retirement fund’s mandate of transparent governance requirements.

Armed with this information, the trustees inform their investment manager to use their 1 000 share votes to proxy vote against the merger, providing mandated governance reasons for flagging the acquisition.

Proxy voting provides a clear line of communication from investor to company that expresses preference for or objection to risk, exposure, returns, asset allocations and mandated ESG policy within a fund. The fund’s investment policy is the blueprint for navigating these elements. It’s the yardstick that evaluates trustee performance and it is the benchmark that assesses the investment manager’s delivery.

What is ESG?

Environmental, Social and Governance (ESG) is a set of investment considerations that believes the long-term sustainability of a company extends beyond profitability. If investors consider the environmental, together with the social and governance issues of how a company functions, the long-term profitability of that company will be improved.

Trustees can request detailed reporting through electronic voting platforms. This monitoring process provides transparency and accountability from your fund manager. Proxy voting is no longer a check-box exercise, but a form of dynamic shareholder engagement.

Shareholder activism runs in tandem with South African history and its leverage has always been the power of the vote.

The 1970s saw companies like General Motors being urged to leave South Africa by the Episcopal Church. The age of disinvestment in South Africa in turn helped facilitate radical changes to corporate SA, and we emerged as a democratic country. The 2023 Sasol shareholder AGM, which had to be rescheduled due to climate activism, is a modern case to illustrate the point.

Whether by proxy or by ballot, South Africa is a nation built on the premise that a single vote has catalytic power. Backed by evidence, and empowered by policy, trustees are encouraged to:

  1. Interrogate the proxy vote reporting process of their investment managers.
  2. Investigate the evidence submitted for votes on behalf of the funds they represent.
  3. Advocate and influence change through the power of the proxy vote.


In South Africa shareholders, i.e. a retirement fund, do vote on the compensation of the top executives of listed companies. However, currently, this vote is only advisory and non-binding. This means shareholders can vote against a CEO’s remuneration package, but the company does not have to implement the decision.

However, there is a proposal in the new Companies Amendment Bill giving shareholders a binding vote on pay at the AGM every three years. If passed, it would mean that 50% or more of the shareholders must agree to the CEO or CFO’s remuneration before it can be implemented.

The bill has yet to be tabled before parliament, so we will wait and see if it will be written into South African law.